Congress is analyzing a 15% tax on offshore banks and 5.5% for banks domiciled in the country with presence abroad.
The Costa Rican Congress is considering three options for taxing offshore banking in a bill to reform the development banking system. "One proposal is for a tax of 5.5%, another is to exempt from taxes these type of banks and a third is a gradual tax", reported Nacion.com.
The new law eliminates the minimum legal reserve amount required by the Central Bank of Costa Rica (15%) for funds destined for home loans.
The application of the new law for middle class housing signed yesterday by the Costa Rican government is in the hands of financial institutions who provide loans for house purchases, which still must consider what returns they will obtain.
The decision to go abroad to raise funds is based on the BCR's recent investment grade risk rating by Moody's.
"The goal is to transfer the debt in dollars from short to long term. We needed the rating by Moody's in order to get into more sophisticated markets," said Mario Rivera BCR manager.
Nacion.com reports: "The BCR started a review process with Moody's a year and a half ago, which ended with the national bank being rated as baa3 by the U.S. firm."
Federico Carrillo, executive vice president and general manager of the International Bank of Costa Rica, has been dismissed by the Board.
Through a press release, the Bank reported that "the dismissal of Mr. Carrillo Zurcher is based on a loss of confidence by the Board, due to the failure to control some of Bicsa's financial operations, namely swaps" .
From October last year to date, public banks in Costa Rica cut their average rate by almost 4.5%.
"In the last four months state banks made a sharp rate cut to place them below the average of other intermediaries and brush with near-zero real returns", reported Nacion.com.
"The banks reduced their rates so that they are now the lowest among the sector and real returns are close to zero.
The economic dynamism of the last half of 2011 and the first of 2012 has generated more demand for loans, particularly in dollars.
Dollar loans reported an increase of 16% (17% excluding the currency effect), while for loans in colones the increase was 14%.
Mario Rivera, manager of the Banco de Costa Rica, told Nacion.com that the preference for dollar credit is being driven mostly by companies with strong links to international trade (import and export) and the domestic demand for imported goods.
While in 2011 Costa Rica’s economy grew by 4.1%, the assets of the banking system increased by 8%.
The financial system of Costa Rica made a giant leap in the second half of 2011, with assets of the 17 constituent entities increasing their growth rate from 2% in June to 8% at the end of the year.
A decisive factor in this result was increased demand for credit in a context of very stable interest rates.
The Bank of Costa Rica is the new administrator of the National Trust for Development, having secured the tender created for that purpose.
The Governing Board of the Banking System for Development (SBD) awarded by unanimous vote the administration of National Development Trust (FINADE), to the Banco de Costa Rica (BCR), following a tender.
The price of the dollar against the Colon has again started to fluctuate, after having spent several weeks at a relatively stagnant level.
In the last two weeks there has been a slight rise, of about six colones, at the banks exchange desks.
However, this rise has not appeared the way it normally does, ie first in the Monex wholesale market, where trading banks and financial institutions do business, and then in the exchange rate offered to the end consumer at exchange desks.
The difference in the interest paid by banks on deposits and loans can be as much as 22%.
Intermediation margins are a measure how a financial sector performs its mediation role and is one indicator of efficiency. Though there are various ways to calculate the figure, Costa Rica's margin is higher than in other economies.
Gabriela Mayorga López in Elfinancierocr.com comments on a study from the Costa Rican Banking Association (ABC in Spanish) that indicates that in June, "Banco Promérica recorded the largest colones margin with 21.8%. It was followed by Citi with 14.3% and Banco General with 14%. Banco Popular had the highest dollar margin with 7.8%".
Commercial banks loaned $84 million between January and August; in the same period of 2008 they gave credits for $302 million.
Mario Rivera is the President of Casalco, the Salvadoran Construction Chamber. He argues the government's anti-crisis plan does help his sector, but it is not enough.
"Builders believe the solution lies in approving the law for Preferential Interests, with which anyone getting paid minimum wage could get a loan to buy a house", reports Elsalvador.com.
According to Banks, the change in the calculation of the reserve will increase the costs of the financial intermediaries and will reduce the supply of credit.
The Central Bank of Costa Rica modified the methodology used to calculate reserves, implicating that, beginning next July 1st, Banks must have deposited in the Central Bank, at the end of each day, deposits of no less than 97.5% of the minimum legal reserves for the previous month.
The Superintendent of Financial Institutions of Costa Rica reported that the repossession of property for unpaid debts rose 77% from February 2008 to February 2009.
The increase in auction advertising for goods recovered by the banks is well-known, especially for real estate and cars whose owners cannot continue to make the monthly payments due to loss of income, unemployment and primarily because of the increase in interest rates.
Driven by fierce competition, public and private banks are carrying out aggressive expansion plans this year.
Seven banks and the Mutual Group have announced that they will open at least 84 branch offices or agencies.
The most ambitious plans are those of the Banco de Costa Rica and Banco Popular, each of which is planning to end the year with 20 new branches.